Economics

01/13/2014

We had a scientific revolution in economics, one that dramatically increased our comprehension of the world and also gave us crucial practical guidance about what to do in the face of depressions. The broad outlines of the theory devised during that revolution have held up extremely well in the face of experience, while those rejecting the theory because it doesn’t correspond to their notion of common sense have been wrong every step of the way.

Yet a large part of both the political establishment and the economics establishment rejects the whole thing out of hand, because they don’t like the conclusions.

11/02/2013

I have said that German bankers have done what the German army couldn't: conquer continental Europe. Actually, the Germans did hold onto it for a few years. The bankers seem to be holding onto their territory better than the army, though. I even said if you at a map of Europe you will find many similarities to a map of Europe in 1943.

Oh, and yes, the US inexcusably spied on Angela Merkel — but that has nothing to do with this, and anyone bringing it into this conversation thereby demonstrates his or her intellectual bankruptcy. Also, frank talk about German economic policies doesn’t make you anti-German or anti-European; again, anyone trying to evade the substance by bringing that kind of accusation in has in effect conceded the argument...

The creation of the euro was followed by the emergence of huge imbalances, with vast amounts of capital flowing from the core to the periphery. Then came a “sudden stop” of private capital flows, forcing the peripheral nations to eliminate their current account deficits, albeit with the process slowed by the provision of official loans, mainly through loans among central banks. The really bad news for the periphery is that so far the adjustment has taken place mainly through depressed economies rather than regained competitiveness; so the counterpart of that “improvement” for Spain is 25 percent unemployment.

Normally you would and should expect the adjustment to be more or less symmetrical, with surplus countries reducing their surpluses as deficit countries reduced their deficits. But that hasn’t happened. Germany hasn’t adjusted at all; all of the rise in peripheral European current accounts has taken place at the expense of the rest of the world.

And that’s a very bad thing. We are still in a world ruled by inadequate demand, and very much subject to the paradox of thrift. By running inappropriate large surpluses, Germany is hurting growth and employment in the world at large. Germans may find this incomprehensible, but it’s just macroeconomics 101.

You might argue that it’s not the German government’s fault that it runs surpluses — but you’d be wrong. (I’ve fallen into this trap, but acknowledged the error.) For one thing, Germany has pursued fiscal austerity despite its creditor status, contributing to an overall tightening of policy in the eurozone...

Of course, I don’t expect German officials to admit that there’s anything to what Treasury says. They’re not big on macroeconomics as we understand it; actually, they’re not big on accounting identities, since their view seems to be that everyone should be like Germany, and run huge trade surpluses.

10/27/2013

Mike Konczal says most of what needs to be said about the underlying sources of Obamacare’s complexity, which in turn set the stage for the current tech problems. Basically, Obamacare isn’t complicated because government social insurance programs have to be complicated: neither Social Security nor Medicare are complex in structure. It’s complicated because political constraints made a straightforward single-payer system unachievable.

It’s been clear all along that the Affordable Care Act sets up a sort of Rube Goldberg device, a complicated system that in the end is supposed to more or less simulate the results of single-payer, but keeping private insurance companies in the mix and holding down the headline amount of government outlays through means-testing. This doesn’t make it unworkable: state exchanges are working, and healthcare.gov will probably get fixed before the whole thing kicks in. But it did make a botched rollout much more likely.

So Konczal is right to say that the implementation problems aren’t revealing problems with the idea of social insurance; they’re revealing the price we pay for insisting on keeping insurance companies in the mix, when they serve little useful purpose.

So does this mean that liberals should have insisted on single-payer or nothing? No. Single-payer wasn’t going to happen — partly because of the insurance lobby’s power, partly because voters wouldn’t have gone for a system that took away their existing coverage and replaced it with the unknown. Yes, Obamacare is a somewhat awkward kludge, but if that’s what it took to cover the uninsured, so be it.

And although the botched rollout is infuriating — count me among those who believe that liberals best serve their own cause by admitting that, not trying to cover for the botch — the odds remain high that this will work, and make America a much better place.

10/25/2013

It is, you won’t be surprised to learn, a really terrible book on multiple levels. No acceptance of responsibility for anything; he retails the same old Big Lie about how Fannie and Freddie somehow coerced Wall Street into making bad loans; etc., etc..

But I wanted to take on one point in particular: Greenspan thinks he has discovered a new law: transfers to individuals, even if fully paid for with taxes, reduce national savings one for one. You can bet that this claim will soon be popping up on the right as an established fact.

What drives Greenspan’s conclusion is mainly the sharp drop in overall saving during the Great Recession, combined with a temporary spike in transfers as a share of GDP, partly because of unemployment and food stamps, partly because GDP fell. But he wants us to see it as a long-term phenomenon, and of course as a reason to weaken the safety net.

The obvious answer is to look cross-country: European nations have much bigger welfare states than we do; do they have lower savings? No...

Strange to say, countries like Germany, Sweden, and France, with their big welfare states, actually save more than we do.

10/15/2013

When I have described the well-considered, coherent political and economic strategies of the conservative white South, as I have done here, here and here, I am sometimes been accused of being a “conspiracy theorist.” But one need not believe that white-hooded Dragons and Wizards are secretly coordinating the actions of Southern conservative politicians from a bunker underneath Stone Mountain in Georgia to believe that a number of contemporary policies — from race-to-the-bottom economic policies to voter disfranchisement and attempts to decentralize or privatize federal social insurance entitlements — serve the interests of those who promote them, who tend to be white Southern conservatives.

Just as a strategy is not a conspiracy, so it is not insanity. Ironically, American progressives, centrists and some Northern conservatives are only deluding themselves, when they insist that the kind of right-wing Southerners behind the government shutdown are “crazy.” Crazy, yes — crazy like a fox.

Another mistake is the failure to recognize that the Southern elite strategy, though bound up with white supremacy throughout history, is primarily about cheap and powerless labor, not about race. If the South and the U.S. as a whole through some magical transformation became racially homogeneous tomorrow, there is no reason to believe that the Southern business and political class would suddenly embrace a new model of political economy based on high wages, high taxes and centralized government, rather than pursue its historical model of a low-wage, low-tax, decentralized system, even though all workers, employers and investors now shared a common skin color.

So the struggle is not one to convert Southern Baptists to Darwinism or to get racists to celebrate diversity. The on-going power struggle between the local elites of the former Confederacy and their allies in other regions and the rest of the United States is not primarily about personal attitudes. It is about power and wealth.

For some time, the initiative has rested with the Southern power elite, which knows what it wants and has a plan to get it. The strategy of the conservative South, as a nation-within-a nation and in the global economy, combines an economic strategy and a political strategy.

The economic strategy is to maximize the attractiveness of the former Confederacy to external investors, by allowing Southern states to out-compete other states in the U.S., as well as other countries if possible, in a race to the bottom by means of low wages, stingy government welfare (which if generous increases the bargaining power of poor workers by decreasing their desperation) and low levels of environmental regulation.

The political strategy of the Southern elite is to prevent the Southern victims of these local economic policies from teaming up with allies in other parts of the U.S. to impose federal-level reforms on the Southern states. Voter suppression seeks to prevent voting by lower-income Southerners of all races who are hostile to the Southern power elite. Partisan gerrymandering of the U.S. House of Representatives by conservatives in Southern state legislatures weakens the votes of anti-conservative Southerners, if they are allowed to vote.

If voter suppression and vote dilution strategies fail, the Southern conservatives can still try to ward off unwelcome federally-imposed reforms that might weaken control of the Southern workforce by Southern employers and their political agents, by policies of devolving federal programs to the states, privatizing federal programs like Social Security and Medicare, blocking the implementation of new federal entitlements like Obamacare or a combination of these strategies.

To date the response of progressives and centrists, as well as moderate conservatives in the North (who have a quite different tradition) to what might be called the Southern Autonomy Project has been feeble and reactive. The South acts, the rest of the country reacts.

Here Midwestern Republican legislatures or governors try to copy the South’s anti-labor “right-to-work” legislation, and labor activists and liberals react. The legislatures in the South and their allies elsewhere pass voter suppression laws, and civil rights groups scramble to counteract them. Now the Southern-dominated Tea Party in the House shuts down the government and threatens to force the federal government into default. In this game of “Whack-a-mole,” the Southern right and its neo-Jacksonian allies in other parts of the country always has the initiative.

Instead of waiting for the next Southern conservative outrage, and treating it as a single, isolated example of inexplicable craziness, the rest of America from center-left to center-right should recognize that it is dealing with different aspects of a single strategy by a regional elite — the Southern Autonomy Project. It is time for the non-Southern American majority, in alliance with many non-elite Southerners of all races, to target and attack every element of the Southern Autonomy Project simultaneously. If the neo-Confederates want to wage political and economic war, their fellow Americans should choose to respond with political and economic war on all fronts, not on the terms and in the places the Southern conservatives choose.

Setting political difficulty aside, it is intellectually easy to set forth a grand national strategy that consists of coordinated federal policies to defeat the Southern Autonomy Project.

A federal living wage. At one blow, a much higher federal minimum wage would cripple the ability of Southern states to lure companies from more generous states which supplement the too-low present federal minimum wage with higher local state or urban minimum wages. (Strong national unions could do the same, but that is not a realistic option at present.)

Nationalization of social insurance. Social insurance programs with both federal and state components, like Medicaid and the Affordable Care Act (“Obamacare”), allow Southern states to be stingier than many other states, creating more desperate workers who are more dependent on the mercy of employers and elite-dominated charities. Completely federalizing Medicaid (as President Ronald Reagan suggested!) and other hybrid federal-state social insurance programs would cripple the Southern Autonomy Project further.

Real voting rights. Using the authority of the Fifteenth Amendment to the U.S. Constitution, Congress should completely federalize voting requirements for all federal, state and local elections, making it as easy as possible for U.S. citizens to vote — over the objections of kicking and screaming neo-Confederates.

Nonpartisan redistricting. Partisan redistricting by majorities in state legislatures should be replaced by nonpartisan redistricting commissions, as in California, New Jersey and other states. The redistricting commissions should be truly nonpartisan, not “bipartisan” arrangements in which incumbent Republicans and incumbent Democrats cut deals to protect their safe seats from competition. (Electoral reforms like instant run-off voting and proportional representation are struggles for a more distant future).

Abolish the Senate filibuster. The filibuster is not part of the U.S. constitution. It has been used by Southern white conservatives from the nineteenth century to the twenty-first to preserve Southern white power and economic privilege. This relic of premodern British parliamentary politics should be abolished. Democracy means majority rule. If the Southern Right loses a battle in Congress, it can try to round up allies and win next time. It should no longer be able to paralyze the Senate, the Congress or the federal government as a whole.

Abolish the federal debt ceiling completely. The federal debt ceiling is another institution like the filibuster which has now been ruined by being abused by Southern conservatives. Now that the Southern right is trying to turn it into a recurrent tool of hostage-taking when it loses votes in Congress, the federal debt ceiling should be abolished. The federal government should be authorized to borrow any amount necessary to fund spending appropriated or authorized by Congress, if there is any shortfall in tax revenues.

Put all these policies and perhaps others together, and you have a National Majority Rule Project capable of thwarting the Southern Autonomy Project. The best defense is a good offense.

Does saying this make me, a white Southerner, a traitor to the South? Among the beneficiaries of a National Majority Rule Project, if it succeeded, would be middle- and low-income white Southerners, whose interests have never been identical with those of the local oligarchs. Particularly among the Scots-Irish of Appalachia and the Ozarks, there have always been many Southern white populists and radicals — from the West Virginian and Kentucky Unionists of the Civil War to New Deal liberals in Texas — who have understood the need to ally ourselves with non-Southerners in national politics to defeat the local Nabobs, Bourbons and Big Mules. The true Southern patriots are those of us who want to liberate the diverse population of the South from being exploited as wage earners and from being disfranchised or manipulated as voters. Another term for the National Majority Rule Project might be the Southern Liberation Movement.

Will the initiative remain with aggressive Southern reactionaries, as their fellow Americans try to appease them or react on a case-by-case basis against a feint here or a diversion there? Or will an aroused national majority, tired of being pushed around by a selfish Southern minority of the shrinking American white majority, finally fight back?

10/13/2013

Apparently, not the rest of the world, although I'm guessing the Germans wouldn't mind the Euro becoming the currency of last resort. From the BBC:

At the start of the current US budget standoff, other countries viewed the situation with a mix of sympathy, concern and bemusement. With the 17 October deadline for raising the debt ceiling approaching, however, the international view has changed to fear and anger.

While many abroad have considered a US government shutdown unfortunate and potentially damaging to the global economy, it is a development the world has survived before. But the last time the US came close to defaulting on a sovereign debt obligation was in 1790, when the country was a backwater ex-British colony, a bit player on the world stage.

More recent examples of sovereign default include Mexico (1982), Russia (1998), Argentina (2001) and Greece (2012). Each of those sparked global financial crises that required US intervention. It is unsurprising, then, that with the US itself possibly causing the economic conflagration, foreign observers are hitting the panic button.

"What is chilling is that US politicians are willing to engage in a game of brinkmanship that is tantamount to detonating a nuclear device over their economy," writes the Times of India. "A bunch of intransigent American politicians are holding not just President Barack Obama, but the entire world to ransom."

Although the enormity of the crisis has yet to sink in for many around the world, those who are paying attention are starting to call into question an American system of government that would reach this point.

"There is something fundamentally wrong with a system that leaves a country without direction, in stagnation, without a budget and potentially without the wherewithal to settle its debts," writes UAE businessman Khalaf Ahmad Al-Habtoor in The Arab Times.

"Obama must get his own house in order not only for the sake of the American people, but also to retain his nation's revered top slot in the global economic and geopolitical hierarchy before the world concludes the US is just an aging tiger without teeth."

In 2009, Zimbabwe adopted the US dollar as an official currency in order to stanch hyperinflation and bring stability to its economy. Now, it faces a possible American financial collapse that would drag it down, too.

"If the US defaults on its debt this would result in the country's credit rating plummeting and the US dollar falling and thereby causing havoc in the international financial markets," writes the nation's Financial Gazette.

As America's largest trading partner, Canada faces a heightened threat, as well.

L Ian MacDonald, a columnist for the Ottawa Citizen, writes, "This is a matter involving the good faith and credit of the United States." And because the crisis is already causing the Canadian dollar to increase in value relative to the US dollar, it is adversely affecting Canadian exports. "Thanks, Washington, we needed that," he writes.

Overseas leaders are also expressing their concerns - particularly in Japan and China, the two largest foreign holders of US national debt.

"The US must avoid a situation where it cannot pay, and its triple-A ranking plunges all of a sudden," Japan's Finance Minister Taro Aso said to Reuters.

"The US is the world's biggest economy and a major country issuing reserve currency," China's Vice-Minister of Finance Zhu Guangyao said during a foreign ministry press conference. "Safeguarding the debt is of vital importance to the economy of the US and the world."

International Monetary Fund official Jose Vinals said that if the US defaults, it "adversely affects advanced economies, emerging markets, low-income countries. It will be a worldwide shock."

The Economist writes that hitting the debt ceiling could mean the US would "slash spending so deeply that it causes a recession. Or it could default on its debts, which would be even worse, and unimaginably more harmful than a mere government shutdown. No one in Washington is that crazy, surely?"

It's a rhetorical question, but one that many in the world are starting to take seriously.

So Republicans may have decided to raise the debt ceiling without conditions attached — the details still aren’t clear. Maybe that’s the end of that particular extortion tactic, but maybe not, because, at best, we’re only looking at a very short-term extension. The threat of hitting the ceiling remains, especially if the politics of the shutdown continue to go against the G.O.P.

So what are the choices if we do hit the ceiling? As you might guess, they’re all bad, so the question is which bad choice would do the least harm.

Now, the administration insists that there are no choices, that if we hit the debt limit the U.S. government will go into general default. Many people, even those sympathetic to the administration, suspect that this is simply what officials have to say at this point, that they can’t give Republicans any excuse to downplay the seriousness of what they’re doing. But suppose that it’s true. What would a general default look like?

A report last year from the Treasury Department suggested that hitting the debt ceiling would lead to a “delayed payment regime”: bills, including bills for interest due on federal debt, would be paid in the order received, as cash became available. Since the bills coming in each day would exceed cash receipts, this would mean falling further and further behind. And this could create an immediate financial crisis, because U.S. debt — heretofore considered the ultimate safe asset — would be reclassified as an asset in default, possibly forcing financial institutions to sell off their U.S. bonds and seek other forms of collateral.

That’s a scary prospect. So many people — especially, but not only, Republican-leaning economists — have suggested that the Treasury Department could instead “prioritize”: It could pay off bonds in full, so that the whole burden of the cash shortage fell on other things. And by “other things,”we largely mean Social Security, Medicare, and Medicaid, which account for the majority of federal spending other than defense and interest.

Some advocates of prioritization seem to believe that everything will be O.K. as long as we keep making our interest payments. Let me give four reasons they’re wrong.

First, the U.S. government would still be going into default, failing to meet its legal obligations to pay. You may say that things like Social Security checks aren’t the same as interest due on bonds because Congress can’t repudiate debt, but it can, if it chooses, pass a law reducing benefits. But Congress hasn’t passed such a law, and until or unless it does, Social Security benefits have the same inviolable legal status as payments to investors.

Second, prioritizing interest payments would reinforce the terrible precedent we set after the 2008 crisis, when Wall Street was bailed out but distressed workers and homeowners got little or nothing. We would, once again, be signaling that the financial industry gets special treatment because it can threaten to shut down the economy if it doesn’t.

Third, the spending cuts would create great hardship if they go on for any length of time. Think Medicare recipients turned away from hospitals because the government isn’t paying claims.

Finally, while prioritizing might avoid an immediate financial crisis, it would still have devastating economic effects. We’d be looking at an immediate spending cut roughly comparable to the plunge in housing investment after the bubble burst, a plunge that was the most important cause of the Great Recession of 2007-9. That by itself would surely be enough to push us into recession.

And it wouldn’t end there. As the U.S. economy went into recession, tax receipts would fall sharply, and the government, unable to borrow, would be forced into a second round of spending cuts, worsening the economic downturn, reducing receipts even more, and so on. So even if we avoid a Lehman Brothers-style financial meltdown, we could still be looking at a slump worse than the Great Recession.

Wouldn’t this be breaking the law? Maybe, maybe not — opinions differ. But not making good on federal obligations is also breaking the law. And if House Republicans are pushing the president into a situation where he must break the law no matter what he does, why not choose the version that hurts America least?

There would, of course, be an uproar, and probably many legal challenges — although if I were a Republican, I’d worry about, in effect, filing suit to stop the government from paying seniors’ hospital bills. Still, as I said, there are no good choices here.

So what will happen if and when we hit the debt ceiling? Let’s hope we don’t find out.

Here is the important part, especially for anyone who has lived or plans to live past 65.

The House GOP framework, pushed by Rep. Paul Ryan (R-WI), would raise the borrowing limit for six weeks while replacing across-the-board spending cuts (known as sequestration) with cuts to Social Security and Medicare benefits. It would also set up formal negotiations to resolve spending disputes and address the next debt limit increase. But the White House and Democratic leaders have rebuffed that approach. "That's over with. It's done," Reid said of White House talks with the House GOP. "They're not talking anymore."

As the government shutdown grinds toward a potential debt default, some of the country’s most influential business executives have come to a conclusion all but unthinkable a few years ago: Their voices are carrying little weight with the House majority that their millions of dollars in campaign contributions helped build and sustain.

Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.

Such an effort would thrust Washington’s traditionally cautious and pragmatic business lobby into open warfare with the Tea Party faction, which has grown in influence since the 2010 election and won a series of skirmishes with the Republican establishment in the last two years.

“We are looking at ways to counter the rise of an ideological brand of conservatism that, for lack of a better word, is more anti-establishment than it has been in the past,” said David French, the top lobbyist at the National Retail Federation. “We have come to the conclusion that sitting on the sidelines is not good enough.”

Some warned that a default could spur a shift in the relationship between the corporate world and theRepublican Party. Long intertwined by mutual self-interest on deregulation and lower taxes, the business lobby and Republicans are diverging not only over the fiscal crisis, but on other major issues like immigration reform, which was favored by business groups and party leaders but stymied in the House by many of the same lawmakers now leading the debt fight.

Joe Echevarria, the chief executive of Deloitte, the accounting and consulting firm, said, “I’m a Republican by definition and by registration, but the party seems to have split into two factions.”

While both parties have extreme elements, he suggested, only in the G.O.P. did the extreme element exercise real power. “The extreme right has 90 seats in the House,” Mr. Echevarria said. “Occupy Wall Street has no seats.”

Moreover, business leaders and trade groups said, the tools that have served them in the past — campaign contributions, large memberships across the country, a multibillion-dollar lobbying apparatus — do not seem to be working.

“There clearly are people in the Republican Party at the moment for whom the business community and the interests of the business community — the jobs and members they represent — don’t seem to be their top priority,” said Dan Danner, the head of the National Federation of Independent Businesses, which spearheaded opposition to President Obama’s health care law among small businesses. “They don’t really care what the N.F.I.B. thinks, and don’t care what the Chamber thinks, and probably don’t care what the Business Roundtable thinks.”

The lawmakers seem to agree. Representative Randy Neugebauer, Republican of Texas and a Tea Party caucus member, said in an interview on Wednesday that if American corporations wanted to send their money elsewhere, that was their choice.

“We have got to quit worrying about the next election, and start worrying about the country,” said Mr. Neugebauer, who sits on the House Financial Services Committee and is a recipient of significant donations from Wall Street.

Few of the most conservative House lawmakers draw substantial support from business political action committees, and business lobbyists acknowledged that the mere suggestion they were considering backing primary challenges next year could enhance grass-roots support for the very lawmakers they want to defeat. But the dysfunction in Washington has now turned so extreme, they said, that they had few other options.

“What we want is a conservative business person, but someone who in many respects will be more realistic, in our opinion,” said Bruce Josten, the top lobbyist at the U.S. Chamber of Commerce, the single biggest lobbying organization in Washington.

In the two previous battles over the debt limit, many chief executives were reluctant to take sides, banding together in groups like Fix the Debt, which spent millions of dollars on a campaign urging Democrats and Republicans to work toward a “grand bargain” on the budget. But with shutdown a reality, and the clock ticking toward default, some of those same executives now place the blame squarely on conservative Republicans in the House.

“It’s clearly this faction within the Republican Party that’s causing the issue right now,” said David M. Cote, the chief executive of Honeywell and a steering board member of Fix the Debt.

The rift, these industry executives acknowledge, reflects longstanding tensions that sometimes emerge between the agendas of corporate executives and those embraced by the conservative wing of the Republican Party.

“We ask them to carry our water all the time,” said one corporate sector lobbyist, who demanded anonymity in order to speak frankly about the relationship with Republicans. “But we don’t necessarily support them 100 percent of the time. And what has happened is the rise of an ideological wing that is now willing to stand up to business interests.”

Despite their diminished leverage, business leaders said they would step up their appeals for an agreement.

Most of the officials said they agree in principle with conservative lawmakers about the need to cut federal spending or roll back parts of Obamacare, but said using the threat of shutdown — or worse, of a debt default — to extract those concessions was both ineffective and dangerous.

Mr. Josten said he had been on Capitol Hill every day this week counseling compromise.

“The name calling, blame gaming — using slurs like jihadist, terrorist, cowards, that kind of language — it does not get you to a deal,” Mr. Josten said of the advice he is giving to Democrats and Republicans. “The problem is everybody is in the same corner here and everybody has to try to save some face.”

To some extent, the Chamber itself, along with other lobbying groups, helped create the conditions for Washington’s impasse.

After the 2010 elections, the Chamber and other business interests funneled millions of dollars into Republican redistricting efforts around the country, helping draw overwhelmingly safe Republican districts whose occupants — many among the most conservative House members — are now far less vulnerable to challenges from more moderate Republicans.

The Chamber spent more than $32 million on the 2012 election, nearly all of it backing Republicans. Similarly, the American Bankers Association sent 80 percent of its $2.6 million in political action committee donations to Republicans in the last election cycle, compared with 58 percent in 2008, according to data compiled by the Center for Responsive Politics, out of dissatisfaction with Democratic efforts to impose more financial regulations.

Now the group’s president, Frank Keating, a former Republican governor from Oklahoma, is among those lamenting Congress’s failure to achieve a deal to avert default. On Thursday, he will testify before the Senate banking committee that “ordinary Americans will bear the brunt of the damage if our leaders do not prevent the United States from defaulting on its debt for the first time in history,” according to an advance copy of his remarks.

To break through to lawmakers, some national trade groups are deploying local business owners, who they believe may have more clout with conservatives than big-name chief executive officers. The National Retail Federation has already begun such efforts in states like Oklahoma and Kentucky, where the Republican Party dominates.

A spokeswoman for the National Association of Manufacturers, Erin Streeter, said the group had decided to sponsor a fund-raising event for Representative Mike Simpson, Republican of Idaho, who is among the 20 House Republicans who have said they will support a budget bill — or at least a temporary measure to reopen the government — without removing funds from the health care program. Mr. Simpson is facing a primary challenge from a more conservative, Tea Party-backed Republican.

“We need to be more aggressive,” Ms. Streeter said.

Michael J. Driscoll, a former managing director of Bear, Stearns & Co. and lifelong Republican from New York, said he would not be surprised if Wall Street executives began to shift some of the giving away from House lawmakers.

“One thing about Wall Street, it is very aware of who is working in their best interest,” he said.

But other lobbyists cautioned that while individual Republican lawmakers may lose financial support, the business community was unlikely to turn its back on the party over all and that donations would continue to flow to campaign committees set up by Republican leaders in the House, including from Wall Street.

“The reason the business community is overwhelmingly pro-Republican is because of the policy positions generally held by the Democratic Party,” said Dirk Van Dongen, president of the National Association of Wholesalers-Distributors. “But there’s a lot of talk around town about the need for Republicans to get into primaries and protect people who are being attacked because they are only 96 percent pure.”